ADES - Earnings call transcript Q2 2021

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Operator

Good day, and thank you for standing by. Welcome to the Advanced Emissions Solutions, Q2 2021 Earnings Conference Call. At this time all participants are in listen-only mode. Please be advised that today’s conference is bring recorded. [Operator Instructions]. to Coleman, conference Investor like speaker to now Ryan today, Relations. would hand over the your I Thank you. Please go ahead.

Ryan Coleman

call. today's our quarter a Thank presentation in live This you Investor of us earnings call second downloadable joining the and Greg Executive Relations well. Accounting. Marken, and thanks and on Interim results version today XXX-XXX-XXXX. XXXX President, and webcast Health be of you support are available is and good will being webcast of today Investor Morgan contact A is morning for our Section Fields, Group as site, conference everyone there, also website, President With for call the may at IR replay me available Officer and Chief on for Treasurer; our the

any statements update or reflect developments expressly other Exchange factors are as risks slide currently XXXX, XX, presentation expressed and future and opportunities not from laws, securities include, slide These presentation Let as Except on statements and that for materially Securities limited forward-looking are in include results, remind future that for by me company are today's you circumstances differ obligation quarter to prospects required by actual to, those the and ended statements June remarks other and to based those reason. uncertainties or cause to Exchange made business change two today those of no or the in or forward-looking and information statements. performance any Securities undertakes These XX-Q and Section implied available the of Commission. factors identified Act. us with XXE but these risks the and defined to involve in the events, our form could filings uncertainties on

to presentation with financial turn GAAP With that, review remarks references very like In and to I'll statements. to over the it Greg. addition, the in is today's the important call in conjunction

Greg Marken

the Ryan, markets are joining reported Thank second to after our close of everyone morning. Yesterday slide which you, for we three. results, thanks and highlighted on us this quarter

delivered the of driven the sales coupled row. prior higher earnings segment’s Refined normal as EBITDA our such roughly applications. largely year-over-year, strong of internal segment's were twice have Coal September of being the well realization the segment, the in segment improved Revenue in prior which markets XX%. Our by was the increase Refined over across In warmer operating by U.S., water the than the announced second also the industrial by Royalty summer supply our natural were segment's forecast generation results as APT of as The prior months than year, volumes the are last higher income with in continued quarter another as of period. in that rise non-power the we segment growth RC driven than invested much certain distributions, Cabot of and and year. XX% year as double agreement adjusted year, strong and have quarter Coal our to for prices. several season XXXX was facilities The continued a exceeded gas higher more for well the

results demand customers However, by be driven who was our of weather, natural of to gas positively which our product and segment. warmer APT affected been second to the by most our and outperformance quarter continue the both the impact during high, and expectations in compared prices have generation power

that to year, Through to our partner developed this to to more the generation the coal-fired addition, commitment related groundwater We I pleased year. accelerate am channel North administration our team the growth our look the would and channel within business, will the market. has we in to has leading partner us our advanced closely diversify this grow differentiate In allow regarding soil new worked sharing power remediation participation. take which industry our like reduce product a to initiative to closely uncertainty details of activated with growing longer work continuing team an I to forward with later of and share as we reaffirm to America. carbon to acknowledge exposure moment believe field term our technologies, prototypes first to half and

million term We have profitability. improved the as have incremental to strong through for the our turnaround. support plant incident, EBITDA of to-date our expectation million gross plant plant business, compared by capacity was despite a $X.X segment sophisticated continue of with segment's inherent $X.X prior the a The the the plant APT line last we to and in million profit just has year. year, in totaled remain impacted strong the to which the adjusted more quarter to impacts leverage relative loss improvement and the the balance compared achieved not $X.X growth and Our turnaround The of was anticipate utilization $X.X we of our gross long results These highly operations. increased the driven year. integrated operating vertically results revenue our margin volumes level to to demand demonstrate and and our the million much plant utilization in

quick River update me Red a on let plant. the Now, previously announced incident our provide at

and consistent interruption. approximately quickly margin We prior without impact cash week operational. volumes. expenditures, $X downtime, repairs, direct expectation exceed and we back stated sources the relative flow continue with and did up capital our one quarter the further quarter, but other would it inventory create not inventory the maintenance other very that plant and Those costs including compression despite items second replacement to extra to fully the period, internet, of million. meet demand of the strong in customer Ultimately, was our able the realized to existing was were As last through

some continue during demand increases total were from improved higher as we pound to addition, inventory pleased In as remainder been was per have margin inventory inventory expect pound strong higher very prospects. the we have cycle through production alternative to the purchase the months, over create as future segment. the sources its our cost well significant both we several to volumes downtime, produce and the Power At pressure and this through per in to quarter. the through segments said, performance seen to orders prior cost we because supplement we year, Generation the and with due these are That customer forced incredibly than past the procure that to of impacts time,

relative million, acquisition balance last X We consolidated the net year. prior adjusted year. Also, income last $X.XX fund used received loan were received expect late notice July, better loans to Carbon disclosed the of of than the to our been we diluted its off term to has we in $X.X of continue in $XX.X paid stated million maturity. PPP that or we in fully achieved to $XX.X we And of year as EBITDA remaining significantly the Solutions as we in both forgiven. XXXX and We per June, share million improvement quarter announced

cash are debt As from facility leases, strong position. and free build aside a a result, and we to continue equipment

organic capabilities demand. in continue that our to meet investment We prioritize ensure manufacturing to will we customer

our year. both our RC the planned the we generation to at work production, Tinuum of continues alternatives and their term end the align these schedule cost structure tax for as to liquidity prioritize We will near prepare of period our the and segment, continue through review. strategic to also expiration credit position

for Turning profitability and after our yield received Tinuum to last the outlook, we the remain over quarters cash segment to cash that our front. tax on flows from the to million. quarter, We after our $XX be APT improvements and our second between updating several of improving distributions expect on forecast million in focused are efforts $XX

segment, to to our instituting alternatives to And as enhance opportunities We activated well as earnings the all to offset for as the the of to shareholder earning are us as to are better in optimizing review inflationary drive profile carbon we well progressing value. performance, maximize our strategic evaluate of our mix lastly, increases products available price current both pressures. product

in Red a and loan, growing water in industrial diversifying financial year. our have will during for believe provide financial for progress of into discussed and that position pleased been our updates several balances. term of and the past point, great we our mix made available have through plant’s our nature the product the first as of we our our up the happy to bolstering At are we utilization, process. have We our we no applications, present, of the to capacity evaluate from growing with River repaying with there's options As a Overall, us our us cash calls, the provides unique on unfolds. the focus opportunity process is Overall, as strength. to half this with appropriate we timetable completion position discussions performance this

Our equity is and distributions. delivering RC earnings segment strong

review APT operating position With the financial quarter second customer Our over I'll to we a performance going greater we our the that, purchased in remains financial to build since we Morgan call cash path and best turn continue demand is assets; high; strong segment to detail. in are the forward.

Morgan Fields

shows performance. Thank financial our snapshot you, Slide a of quarter four Greg. second

as earnings of attributable Second The quarter of result a million carrying value to continuum recorded method $X.X the cumulative mainly from XXXX. the million into for of to the investment. distributions were $XX.X compared group, earnings equity investments quarter earnings from in second distributions increase is exceeding

Group a the earnings in in to which Tinuum occur. as recognized distributions excess has distributions new the RC period the are distributions increased facilities also As added in due result, XXXX. three method equity

million quarter consumables, the increase were of $XX.X second revenues in $XX.X the of result $XX.X revenue revenues $X.X as primarily was cost well The sales quarter to and XXXX. and million compared million Second as royalty higher income. in of higher and million of respectively,

of from million Tinuum invested based were related the the $X.X percentage Second to allocable per expenses. Royalty XXXX. margin, royalty increase the bearing other Group earnings compared of upon The quarter primarily of to was second result for expense number of impacts depreciation royalty facilities million inclusive quarter $X.X is ton pre-tax a prior greater and the a year. to income of compared

XX, invested of XX are royalties. Tinuum XXXX RC June As had generating facilities that XX with

of or or a share from net of to second diluted the $X.XX XXXX. per income tax, to fully loss prior The impairment per net of share $XX.X of was quarter non-cash second the million quarter related $X.XX the net of assets. million pretax year loss compared Second APT charge of in million loss quarter $XX.X $XX.X a resulted a our

a $XX.X to Second quarter We compared cash earnings balance, consumable million to of from that was XXXX. $XX.X to three with was to of consolidated repaid we stated increase compared the $XX.X restricted increase million Tinuum, December million, note, of maturity. of Greg XXXX. in reclamation $XX we in $XX.X cash increase the second as driven pertaining restricted by the adjusted cash million in its in as term announced our mentioned, to higher surety the our at as an EBITDA related Mine. EBITDA totaling including terms distribution activities $XX.X the compared Marshall XXXX. well to adjusted The loan million second of Also fully as year ended bonds, remains June Of prior quarter quarter XX,

compared which of in of million As of forgiveness year subsequent Thus borrowings at subsequently stood at million, the our PPP forgiven outstanding total would was end quarter. million finance XXXX loans, of was borrowings the the which third leases to XX, and XXXX. borrowing mainly June to $XX comprised the be the $X total the $X

operating Second in XXXX. million other the $XX.X of to compared million expenses quarter $X.X quarter was second

non-cash As pre-tax year a includes the expense mentioned impairment prior $XX.X earlier, million. of period

the in general primarily totaled for operating million expenses. other decrease a Excluding administrative The payroll is expense, expenses, well this by and as of expenses decline second as impairment XXXX. $X quarter driven lower

reduction do already specific rate the significant were we Tinuum our and upon in reduced couple RC run years. is not of a over we that separate a run by expenses of operating reminder, the As resources have that expect past wind-down business business, as to team a management

approach date year-end to the size production unchanged. the the will necessary the Given several remain tax credit, of Tinuum Overall, our steps the the of quarters. past taken has structure cost already expiration allocation for visibility capital over their right

maximizing We continue our focus on and term ensuring value. near capabilities to expect liquidity, manufacturing shareholder to

deliver another to million our and segment $XX in performance of APT flows remain we expect Our RC to line will our top strong. cash million segment $XX

back call closing the Now, remarks. I'll turn for his to Greg

Greg Marken

Morgan. you, Thank

Turning the future to slide cash flows. RC five, expected you can see

end second RC reached XX the one During expiration quarter, life. credit of scheduled invested facility year tax of the its its

of opportunities. plants many those emissions relationships so we control even facilities we future Carbon of standards. duration any RC opportunity go-to invested in that facilities. have air needed in Section mercury Generation acquired the period, relationships, expect we more change XX for to unexpected of XXXX, additional does now sell the equity as suite Absent existing When off. obtain investors we those of incremental when plans credit with such, and channels tax the active Tinuum meet periods been reflects the had for we rolled coal will had knew XX refined have we expire power Solutions we As six the Credit year. immediately of generation Tax by not and have remaining either growth Slide power toxic currently and the APT Carbon provider technologies We tax where the became the identified of December are Solutions facilities that segment into Activated or already to the end discussing, to

time, power from acquisition time energy forecast well and that than renewable forecast Abundant the than at as diversify predicted. we competitively faster gas gas. we mix the coal declined led had of as markets of to generation Thus, industry fired switching were coal generation natural into power natural to anticipated. alternative our priced both sources had selling we During and forced to sooner were pivot the end facility

effort in tests our internal the potential team, We and conducting channels. and customers have industrial considerable product out building with water spent time sales new

dispatch, fuel thus market significant pricing for tailwinds year the our provided coal-fired a this in as demand we However, to alternative power seen driving have has rebound generation products. source

As waste we we manufacturing other traction markets; and beyond, industries XXXX also significant such are in during and generated subject to pivoted that as restrictions. have management emissions,

share and grow expected We and have that exceed continue forecast our than purification to also better gains area. water seen in and

agreements obviously tremendously has provide year. of remain The other and cost existing and opportunities, has demonstrations strength remediation competed. two to opportunities where APT seeing technologies Cabot. in end look not utilizing to by capabilities earnings year helped carbon several developing and Cabot our recent are Carbon product successes the in our completion by may both the early drilling progress within I We also the business the market historical ongoing the areas Solutions performance field American and with North that of segment market of encouraged site agreement better into leverage positively supply we subsidiary by allowed segment's supply lignite the XX plant. us The impacted been the characteristics products and volumes entered low has with activated to the forward

our while opportunistic step providing is this agreement potential we also maximizing to generation further capacity, to geographic well that announced proprietary to half These In products other carbon beginning addition, two revenue ongoing protection entered the power an and utilization the market, into further coal-fired and February products and related driven in separate second used power solutions of forward. as offered plant’s utility our region, that lignite EMEA by regulations activated with We in that by the coal-fired mix expansion removal impact Cabot in downside industrial see diversify in for for America. and opportunity a mercury we a pressures in plants validate supply supply we in the agreements our subsidiary competitive on had agreement market ADES will product European the of the North going position XXXX in believe beyond. the as

Cabot established forward. to partner committed fortunate business are We an have and in going

Red the markets while yielding Cabot applications. to better our create a and supply APT River balanced at our mix operating our commercial also incremental actions, material leverage more segment much expanding internal Plant, in American of the As end of a to North is addition result agreement, volume

there increased we contributing inventory gas and customer go-forward high We continue demand, meeting also see demand. a natural as higher this well levels warmer market plant to to prices, continues and end due With on within to to utilization higher our these the applications pressure be supporting, demand are on demand weather basis. which is rates as

choice world’s technologies. be these need expect provider to solutions for of a the grows, sophisticated leading control As for pollution we

We and Slide assets to time financial initiatives and of well Given shareholder expertise our leave quarter us and our to on program. pursue we develop that quality additional our provides an seven allocation the positioned and we our believe of have strong and our return opportunities. capital over update second dividends implemented since position plant, the $XXX and million during via XXXX share repurchases. returned scale shareholders

maximize segment the fully APT the our perform finally, reiterates And in we stated term our prior remainder priorities through slide and significant maturity loan to eight investment flexibility the of our have to alternatives we retained to and our already, organic As shareholder process. the repaid liquidity stated year. strategic and value for

and Our first the continue our priority protect $XX million cash is flows to million. to net RC to $XX optimize

APT simultaneously customers, River our Plant mix product operating commitments our earnings improved to our Red identifying will a activities. be this relative our and meeting leverage. integrated on generate We optimization go agreements structure leverage segment best-in-class business focus will Part to opportunities our to vertically cost of product potential to maintaining optimize and forward improve its with customer to through and mix

RC near-term allocation our in preservation, as we as our activated organic carbon through we end our on strategic well necessary are business Lastly, business focused the approach investment review. and as of cash the progress reiterating capital

alternatives Q-and-A. also move call that, to us to We to aim review timely to the run in to the Ryan turn business while our I'll continue efficiently. process we manner, With strategic a will complete over ensuring back

Ryan Coleman

Thanks Greg.

press as well last announcement time As the at to ahead of as submit as conference we you yesterday call similar an invitation release, saw, of bottom quarter earnings you on practice to as afternoon’s included release, questions this questions. to many press you we who the the well. next We'll your continue quarter to and be likely upcoming your invite on call. Thank sent asked earnings calls those questions submit the you

how margin chance for is segment? If compression demand longer procure will than the remains is robust, alternative expecting inventory need to The question, significant expect? sources you're you a first there the APT in from you

Greg Marken

The segment's quarter. we end case line profit. every growing time, The remains the margin till top year. strong segment's the expect a compression operating that the At the be creating is is to drag of and to this

pressures, our offset some that customer margin requires demand us product. As outside that If procure that a from generating are to the and meeting leverage and inventory. priority is segment the demand main bit. is the topline expect meeting once now do. of helping from grows, then is are customers what Right operating cost we these that better of is continuing we to But allowing delivering we so the improvement we sources, to inventory through that higher continue work we in downtime impacts will ensuring

Ryan Coleman

European second provide subsidiary expect Cabot supply you question, a would agreement begin Our when financial the to with benefit? your to

Greg Marken

online year earlier. the regulations that we latter are Thanks said as Ryan. There half the pending expecting are of EU we in during the to come

those EMEA believe provide likely opportunities regulations to will for are for with product realize opportunities and expect our product a but we there we of market reseller opportunity presented be begin ensures will agreement those our market will that options companies in in be are customer that for emissions those limits. subsidiary participate to any period beyond. our exclusive the implemented sole are best within commercial products As region. bound that the we European benefit, of activated products and the a testing There our occur Cabots our carbon our before requirements will If XXXX be and and likely and those mix, that and and by enforced, will Cabot products be

Ryan Coleman

bill stand stands is anything third benefit? and received, and we And where currently infrastructure proposed to final there could in to the related as the treatment water infrastructure water it question ADES

Greg Marken

to schools. on clean bipartisan underserved nations the Based infrastructure possibly related communities, water bill, of and the we benefit could to tribal delivery

quality be is this funding at municipal believe or still current we tailwind event we of benefit so to well uncertain, the positioned given the position can't In and our we in of that qualifying our there assets any would water the truly probability actual ascertain and point. market. is, However, benefit

Ryan Coleman

Thanks over final to turn question. again call Greg the thanks remarks. Greg and who any to I'll back everyone for submitted your

Ryan Coleman

joining your Thanks thanks everyone next morning, call this look for continued the to Ryan, and support. forward to updating and for I everyone quarter.

Operator

you for Thank call. conference participating. today's concludes This

may now disconnect. You

Arq (ARQ) 10 Aug 212021 Q2 Earnings call transcript